What Is Going Wrong for Canadian Solar?

While many solar companies are facing huge problems to sustain in the solar industry, Canadian Solar’s (CSIQ) business has performed well in the past six quarters. In the most recent quarter, Canadian Solar shared earnings per share of $0.68, $0.31 better than the estimates. The company’s revenue came in at $805 million, a surge of 26.6 percent year over year and $88.44 million greater than the estimates.

In the prior three years, Canadian Solar has received a windfall of profits from developing projects in Canada, where it was among the few experienced and qualified bidders for solar projects.

But now, the company is expanding its reach globally with the help of experience gained in Canada and the Recurrent Energy team assimilated in 2015.

On the other hand, one of the most important wins for Canadian Solar was in Mexico’s energy auction for 63 megawatt solar power that will receive $0.04795 per kilowatt-hour. As a matter of fact, this was a viable bidding process and Canadian Solar successfully achieved a leading position, seizing a piece for the escalating Latin American solar industry.

Earlier, it was reasoned that frail crude oil prices have a negative impression on investments in renewable energy like solar, but the story has changed so far nowadays.

Image by jniittymaa0 / Pixabay

In reality, demand for renewable energy has endured to surge mainly due to the pollution and emission control measures around the globe.

As a consequence, despite the fact that oil and gas prices have diminished, investments in renewable energy have remained robust. The overall investments in renewable energy sources have surged ever since the oil price slump started two years ago.

Moving onward, stockholders can presume Canadian Solar to endure its robust financial performance as solar demand will carry on escalating gradually. Furthermore, it is projected that worldwide solar installations will cross the 60 GW spot mainly because of higher installations in India, China, and the United States.

Conclusion

Due to several bad apples in the solar industry, well run companies like First Solar (FSLR) and Canadian Solar tend to get punished out of proportion by the market. However, I think Canadian Solar’s recent pullback is a great buying opportunity for long term investors. The company is profitable and is growing at a rapid rate, which makes it better than market leaders like SolarCity (SCTY). It will not be long before investors realize the true potential of the stock, which is why I think it is a buy.